Respuesta :
For 2022, the standard deduction is available for the first $1150 of unearned income received by a kid; the following $1150 is subject to the child's income tax rate; and unearned income received in excess of $2300 is subject to the parent's marginal income tax rate. These levels are $1100 and $2200 for the tax year 2021.
What is Kiddie Tax?
The Tax On A Child's Investment And Other Unearned Income is the official name for the kiddie tax. It is a tax that minors must pay on unearned income, such as investment income or other forms of income.
Before 1986, when the Kiddie Tax was implemented, parents could avoid paying higher tax rates on their investment income by transferring assets into the names of their minor children. The Kiddie Tax is intended to prevent parents from giving significant gifts to their kids only for those gains to be realized at a significantly lower tax rate.
Therefore, as stated above the kiddie tax is relatively low and the amount of the child's income deducted is also stated above using an example.
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